slowoldman – Member
Loans that don’t get paid off sound remarkably like grants to me.

they get repaid if the individual earns a lot of money.

they barely get touched if the indivdual doesn’t earn a lot of money.

it’s not a completely unfair system.

(ie, low earners won’t have to pay very much, if anything at all)

present figures suggest the England and Wales system encourages more low income students to attend university than the fee free Scottish one.

Should do wonders for the budget north of the border 🙂

Loans that don’t get paid off sound remarkably like grants to me.

Indeed. But if you repay £200 a month for 30 years then it probably feels more like a loan. After which you would have repaid precisely 0% of the capital and it would be written off. 😕

Then it’s a tax. A repayment for your grant and education.

those numbers don’t add up.

interest rates on student loans are currently 1.5%

you’d need to owe … £160k for the monthly interest to be £200/month

yeah thats £72k, is wonga running it?

The question is not, is this fair for the student.
It’s: is the collective debt going to get paid back.

those numbers don’t add up.

interest rates on student loans are currently 1.5%

nope, if you started uni in or after 2012 interest rates are much higher than that (because you’d be on a plan 2 loan rather than a plan 1 loan).

Here’s a reasonably concise explanation:

http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes#7

Average debt now is estimated to be £44K.

If you’re earning over £40K then interest will accrue at RPI + 3%: which for this year is considered to total 5.5%.

That works out to £201.67 per month in interest on a 44K loan.

So before when they covered the cost of the courses and funded people by grants and never expected to see a penny back. Now those who do well repay something, it’s a better system if you just ignore the numbers.

What Mike said, it’s a “university tax”. You only have to pay it if you actually ever earn enough to benefit from your education.

Pretty sure paying more tax if you earn more is covered already by NI and Income tax?

Teaching certainly wasn’t. My mum is a retired teacher and she did a course at college but doesn’t have a degree.

OP – no it’s not.

Good news, we can now price tertiary education properly. Most courses are now being exposed to be not worth the (still-distorted) price. Already we are seeing two-year alternatives and that is a good thing. Students will soon start demanding better VFM – sorry buggar all teaching in final year, just get in with your dissertation etc won’t hold any more.

In time we might have some sensible decisions being made – even the rebirth of apprenticeships rather than BA (third class) in mejia studies….

using a simple loan calculator
http://www.moneysupermarket.com/mortgages/calculator/
pay 250/month for 30 years and you pay off the 44k, pay 200 and you only clear the interest. Simple pay off capital and the interest goes down.

Pretty sure paying more tax if you earn more is covered already by NI and Income tax?

It is but they don’t collect enough tax to fund the system, politically you can’t increase taxes across the board. Remember those that will be paying this can’t vote

Hopefully by the time my offspring (still in the planning phase themselves) reach such age, university courses will have ‘reset’ to how they were viewed pre-Bliar; neccessary for a small percentile who needed a qualification for thier vocation and few others. These courses in ‘meejia studies’ and ‘hair and beauty’ and whatnot are of little value, but sadly employers seem to expect a degree.

If I was a parent now, I’d offer my children equivalent training and lifestyle to a value of a university course, but in a huge variety of areas. They could get any number of real-world useful qualifications to ensure future employability (chainsaw use, yachtmasters, plastering, electrical installation, HGV and plant tickets, ski instructor… you name it) and then six months per year of ‘fun’ jobs – ski seasonairre, holiday rep etc to tick the ‘social life’ aspect that university may or may not offer.

They’d come away with a huge range of skills and experiences, they’d have travelled and met loads of people and wouldn’t have a £44k loan hanging round thier neck for the rest of thier life. I wish I’d done something similar instead of my useless Politics and History degree.

that’s noble, but those courses won’t be availabe on a ‘train now – pay a little bit back when you get a job’ basis.

It is but they don’t collect enough tax to fund the system, politically you can’t increase taxes across the board. Remember those that will be paying this can’t vote

The country as a whole still subsidizes tertiary education, but those who benefit most from it are required to pay for it. So the future middle class get taxed and the poor don’t, it is outrageous.

I thought it was rather earlier than that – hardly a modern thing anyway.

Whether it is “modern” depends on your point of view. I suppose it depends on how long your memory is.

It is part of the trend in upping the level of general education required before you can take on a professional qualification. In both teaching and nursing the entry requirement used to be A-levels plus professional qualification. Now it is degree plus professional qualification.

In the context of this thread that means three more years study. Factor in the lost earnings as well as the 40k plus debt. Is that necessary? Are you really doing your job 40k+ betterer because of it?

Still, if it upsets you, delete “teaching” and subsitute a profession of your choice. Banking perhaps?

Would it be preferable for teachers to be less educated?.

Of course not. But you are confusing what is preferable to what is necessary and affordable.

And I think you are confusing being well educated (which i am all in favour of) with having a degree. 😀

Highly educated does not equal highly trained. Outside of the medical area are can’t think of many, or any degrees that produce trained people, only only educated people. For some jobs tht level of education in required to start the training but for most it is not.

Quite so ahwiles – you’d need to secure funding from somewhere. Bank of Mum and Dad, most likely…

doris5000 – Member

Are we saving up a massive problem for ourselves (and our future graduates?)

Yes. It will be a massive problem, on the other hand free Uni is not the solution coz I will have to pay for them … yes, I will whether I like it or not.

The only way to deal with the system is to swarm it.

I guarantee it will break down and all of them will be let off and I am not talking about recent fees paying students but all past and current (or even future) students that are still paying.

Swarm the system which I think it is different from your normal placard protest by the way.

Either that or Universities charge less etc … find something to sustain themselves and not sell mickey mouse courses.

🙄

My problem (and it’s a fairly selfish observation but one I expect many have experienced) is that when I was a single graduate I was earning enough but paid very little student loan. Now in my early 30s with a young family and starting to pay back larger and larger amounts, and with a wife intermittently on maternity leave or childminding cash is at somewhat of a premium. By the time the kids are no longer financially dependent on me, I’ll have no student loan to pay off any more (admittedly this may not be the case if I had a new student loan). Those that didn’t have rich parents and got bigger loans and will experience more of this – those with new loans won’t even have the point of paying off the loan to look forward to.
The new loans actually cost the government more due to almost all unis going for the maximum amount. This is kind of a good thing as the universities needed the additional funding, but I don’t think student loans (or graduate tax) are the way to fund this.

Something occurred to me as i was mulling this over at lunch.

Take nursing. You need a degree to become a nurse. But the highest paid nurses (after experience and pay scaling) earn about £35K, at which level you’d still be accruing interest faster than you’re repaying (on a 44K typical debt).**

So there are whole professions out there who are forced to take out the loan, but guaranteed to never pay it off.

That seems odd. And possibly unfair. And again, I wonder whether the govt’s projections for the number of defaulters includes the % of students that are necessarily precluded from paying the loans.

.

** yes you can become a nurse consultant but you need a Masters, more loan, and the interest accrued in the meantime would mean that even with a top-of-scale £64K salary they wouldn’t be able to pay it off

I seem to recall that they estimated 45% of student debt would be written off.

It’s not unsustainable, but it is bad.

The irony is, it’s also a massive unaccounted cost to the public purse, because the repayment levels are dropping, and massively under the (blatantly optimistic/dishonest) forecasts. But that’s OK because it won’t come home to roost until future governments. One of the policy documents I saw genuinely stated that there would be no increase in the amount of unpaid debt from the tuition fee rises- all of the cost/benefit analysis was based on historical rates from when it was £3290.

Meanwhile, in Scotland…

doris5000 – Member
So there are whole professions out there who are forced to take out the loan, but guaranteed to never pay it off.

It is a stealth bribe to the population.

Many will ask for more loans because they know they don’t have to pay back if their top earning bracket will not reach that level forever, just like your example.

That’s why I am paying for their education indirectly whether I like it or not.

My view/suggestion is for the parents to fork out 50% or 60% of the tuition fees if they want their children to go to Univ.

Otherwise, the financial bubble is getting larger and larger again.

Considering the government previously paid the fee’s you now get a loan for how does it change the cost to the tax payer?

The universities have spent more, ‘cos they are getting more in.

The other side of this, is the parallel attack on university funding from the Home Office- concerted and continual efforts to damage our ability to recruit feepaying international students. Taking that money out of the economy- the university economy and the wider UK economy- is basic idiocy and is going to lead to further cuts in university budgets and the quality of UK education. International students subsidise UK students and research yet they’re being treated like the enemy.

chewkw – Member

My view/suggestion is for the parents to fork out 50% or 60% of the tuition fees if they want their children to go to Univ.

And for kids whose parents don’t have £9000 per year to not go to university.

Meanwhile, in Scotland…

Don’t ask Uncle Vince what is happening with this…..

Or even Edinburgh Uni (“free tuition concentrates resources on those who are already relatively advantage”)

Reality v rhetoric….

That study you like also made the observation that English universities provide on average 3 times more funding than scottish universities to low-income students- but just chose to ignore the TWENTY SEVEN THOUSAND POUNDS difference in starting positions, and government funding and access support. For some reason.

So you’ll have to forgive me if I dismiss it as a preposterous bag of shite. They chose to compare apples to oranges, and complained that scottish students only get one melon while english students get 3 raisins. You know how sometimes you notice that everyone who wants to believe in a particular position quotes the same study every time, and avoids competing opinions? That.

Edinburgh and St Andrews, and to a lesser extent Glasgow’s, realities are unsurprisingly rather different to the less elite institutions. Meanwhile it looks like we just exceeded our widening access target, again.

Indeed NW, so v dangerous to make simplistic comparisons between Scotland and Englans isn’t I?!? 😉

Northwind – Member

chewkw – Member
My view/suggestion is for the parents to fork out 50% or 60% of the tuition fees if they want their children to go to Univ.

And for kids whose parents don’t have £9000 per year to not go to university. [/quote]

Ya, go to some Poly or technical college or think of something else.

Your choice is either you burden the society or you burden yourself.

😮

Of course – it’s before I went to uni, though my mum was also a teacher without a degree (she started a course but never finished it), but that was a long time ago. But the context here is that it can’t be blamed on TB (can we now blame everything on him rather than Facha?) hence it’s not part of the current creeping need for degrees for everything, and from a time when people still got grants and loans didn’t even exist, so not all that relevant to this thread.

I’m still not seeing it as a bad thing that teachers have to be degree level educated.

Still, if it upsets you, delete “teaching” and subsitute a profession of your choice. Banking perhaps?

Who knows – I’m sure there are plenty of good examples, just that teaching isn’t really one of them.

Unfair to whom? It still comes down to something which is effectively a tax for most people gets described as a debt.

I suppose if you were being picky about the progressive nature of this tax, the best paid people do at some point stop paying the tax, but only after they’ve paid a lot more back into the system than most do.

I suppose if you were being picky about the progressive nature of this tax, the best paid people do at some point stop paying the tax, but only after they’ve paid a lot more back into the system than most do.

I’m not sure they/we do.

I graduated with about £19k in debts in 2004, I’ll have paid them off in the next couple of years, so circa 13 years after graduating, paying whatever PAYE takes off me.

If I was earning less I’d be paying less, but there comes a point where you’d never entirely pay it off before retirement. That person will pay a lot more in 30-40 years than I will have done in 13 years.

So in that way it’s regressive.

I’m not sure which is worse though, a few % on the ‘40%’ tax band or the student loans. On the one hand VFM should be a factor in the decision to go to uni, it should be in the pursuit of a better job, so it may be putting off those who studied Grography/English/Ethics only as a way of demonstrating intelligence to go into unrelated jobs. But on the other, a higher tax rate would be more progressive. A halfway house would have been a proper graduate tax, but then how do you reclaim it from people who more/work abroad?

IF your well paid you can pay off the loan quickly. If you earn enough to make payments but not pay it off you can end up paying more back than someone who is highly paid and pays the load back quickly.

unfair to everyone, i’d have thought.

unfair to the nurses who have to accept that they’ll be paying an extra 9% tax for 30 years with no hope of it stopping (whereas people in other professions at least have the chance of career progression to a point where they might pay off their loan),

unfair to higher earning graduates, whose loan repayments are therefore part subsidising the nurses, when previously the whole nation took more of the load

unfair to us as a nation, as we really need more nurses but the govt seem to be doing quite a lot to discourage people taking up the profession.

As a 1995 graduate I was the first generation to be offered loans – grants were frozen and then topped up by increasing loan amounts. At the time that seemed fair, after all I gain the most from having a degree so why shouldn’t I pay the cost.
I hate debt so I worked in the summer holidays and the student bar in term time and only had £1,600 by the time I graduated. Took me until 2003 till I paid it off!

Looking at how long it took me to pay off that tiny amount and the situation we have now, it looks unsustainable – both for the lender and the student

Students are struggling to get decently-paid jobs with prospects so the chances of them paying off their debts looks increasingly likely. The 2008 crash began with a load of people being leant money they never had a chance of paying off and eventually it became clear all those ‘assets’ were bad debts – I wouldn’t be surprised if the loans scheme goes bankrupt at some point

From the graduate’s point of view – coming out with that much debt, without the well-paid job to pay it off, the need to save up massive amounts for a house, pay a massive mortgage, and also think about a pension…. well, what’s the point?

We’ve utterly screwed up the opportunities for the younger generation… if I had kids I’m really not sure how I’d advise them re whether to go to uni or not, it could well trap them in a life of debt

I’ve just checked, my SL won’t be clear until 2019 I graduated in 2010 😥

@brooss. I think this entire high debt leaving of university also effects what industries pople go into, and effects things liek the “engineerign recruicment crisis”.

I went ot uni in 1999 and I am one of only one or tow other people I know who did my course or realted who went into a engeering related field. Everyone else went in to finance as you need to earn finace money to be able to pay off debts and buy a house e.t.c. Really I should have too as now I’m 35 and dispite having a half decent job still have most of my student debt (small by today standards) and have only just manged to buy a small house dispite being very frugal but I didn’t think down the lien the differnece in incomes and progression rates would be so differenet.

Well I’ll decide how to discuss with with my son on how bright he turns out – ultimately it’ll be his decision but if he wants advice then the more likely he is to have the potential to have a high salary then the more I’ll suggest a degree is appropriate. So many average kids think they are bright just because they can get onto a Uni course but many of them have just been mislead into thinking any old degree is a ticket to a lucrative career.

Then there’s all the pressure from immigration, not sure how wide spread this is but I’m sitting in a room full of Indians here in Gloucestershire working a high value IT project – that’s 22 Indians and 3 white consultants. Common in my area of IT anyway.

But then you’re talking about the old system, where the interest rate is such that they might pay more in absolute terms, but when adjusted for inflation they don’t.

I was more referring to the new system. By my calculations, anybody earning less than £37.3k will pay less than £44k in total for their loan. It’s only when you’re earning rather more than that it starts to become regressive (can’t be bothered to work out the exact amount where you’d pay more than £44k adjusted for inflation, but I’d think well over £40k a year). Hence my suggestion that most people pay less back into the system than those who pay their loans off, and I’m not sure socialists should be crying for those who do pay more.

Which is interestingly well above the max suggested salary for a nurse, hence in the context of a system where graduates do pay this “tax” (debating whether we should have the system at all is another argument), it’s not all that unfair on the nurses that they never pay off the loan – even earning £35k for 30 years they’d only pay £37,800 in total.

is an oxymoron

unfair to the nurses who have to accept that they’ll be paying an extra 9% tax

9% on everything they earn above £21k, which even at £35k is only equivalent to 5% on basic rate. They’re better off than if they did have to pay for their “loan” in full, see above calc.

unfair to higher earning graduates, whose loan repayments are therefore part subsidising the nurses, when previously the whole nation took more of the load

more accurately, the higher earning graduates are no longer being subsidised by the rest of society for their own courses – I’m still finding it really hard to get upset about them paying more.

Fundamentally the issue is still that these aren’t real debts, and never being able to pay them off isn’t actually a bad thing. In case I need to point it out again, what I’m discussing here is the mechanism for paying off the loan, not whether nurses should have to have degrees or whether the nation should pay for everybody’s university courses (personally I think the nation should pay fees, but students take out loans for living costs – but with a reduction in the numbers going to university – a more elitist system if you like).